Region-level yield and area price elasticities for Chilean wheat incorporating climate variables
Wheat yields have increased in Chile in the last thirty years due in part to incentives, increased input use and improved varieties. Region-specific price elasticities of perhectare yields and planted hectares are estimated using region-level data for the period 1975-2007. Price-yield and price-hectare elasticities are similar, although slightly lower than those obtained by Morales and Foster (2002) in all regions, ranging between 0.33 and 0.73 for yields and between 0 and 0.43 for hectares. Values of price elasticity for total production range between 0.38 and 1.12. For two of the regions studied, climate variables were available and their inclusion results in a reduction in of the elasticity of total production with respect to price. The results suggest that the inclusion of climate variables should be considered when estimating producer responses to prices and when projecting the likely impacts of forecasted climate changes on producer decisions.